In April of 2002, I invited my friend Mark Daly to lunch to

discuss fee setting strategies for his immigration law practice. I

had discovered the revolutionary benefits of using alternative

billing methods for my own consulting business. It was a new

world for me! While most consultants charged by the hour, I

realized that not only did time based fees limit my income

potential, they were completely incongruent with a high level

of service to the client.

When I first started using alternative billing methods, namely

flat fees or flat fees plus a bonus, I did it solely because I

realized it was going to make me more money for the same

time spent. It was a completely self-serving strategy. Not until

later did I realize that there was a huge amount of integrity in

using these alternative billing methods; the client actually

benefited in a myriad number of ways I had never seen before.

What I mean by integrity is that the client was comfortable with

my fees from the very start because they knew exactly how

much they would be paying. By charging a flat fee I had

completely removed for them the issue of “is he padding his

bill” - “Is he working quickly enough?”

Another thing I realized that benefited my clients in a big way

is that they would never again have resistance to calling me and

asking me for advice in regards to their project. When being

billed by the hour my clients had been forced into deciding

whether that phone call was going to be worth the extra time

for which they would be billed. And while understandable, this

could be hugely self-defeating – they had hired me to fix their

problems but now were afraid to call me because they thought

it would cost too much!

So now, to my delight, I realize that charging my clients based

solely on the value THEY received rather than the time I spent

– after all, which one is more important - I could have them be

comfortable with our relationship at the exactly the same time I

earned significantly higher fees for the same amount of time

spent on their projects.

All of this was very important to me, because I had hired a few

attorneys over the years that had ended up charging me a lot

more than the value I had received from their services. And

frankly, because of that, I was a little bitter not only toward

those attorneys but attorneys in general.

Because of these experiences, I was excited for the opportunity

to talk with Mark about fees regarding his practice. I wanted to

know everything there was to know about how and why

attorneys set their fees, and Mark was a great person to ask.

Mark had worked for three years at a small construction law

firm and had recently left to start his own immigration practice.

I knew that he had suffered by working grueling hours and

experienced overwhelming expectations by the firm for him to

produce more billable hours. I also knew Mark’s wife and

children were unhappy about his constant absence from the

family to keep up with constant demand to produce those

billable hours.

Mark arrived 15 minutes late, and I couldn’t help but observe

his appearance; he looked shabby and harried. He told me about

the client he was scheduled to meet that afternoon to discuss

preparing an investor visa. I asked who the client was, and he

told me that he was a European entrepreneur who was

interested in opening a natural healing clinic in Santa Barbara. I

asked Mark how much he was planning on charging, and he

told me that he charged a flat fee of $2,500 for the visa which

was the going rate for the industry. I acknowledged him for not

charging an hourly fee, and encouraged Mark to carefully

review all of the value he was going to provide to the client

and charge a fee based on that, not the going rate for the

industry. I saw the lights go off in Mark’s eyes as he grasped

my point, that his criteria for setting fees had been

inappropriate.

Later that day I got a call from Mark. He told me that he had

rewritten his contract to list all of the services he proposed to

perform on behalf of his client, in detail, and had quoted a fee

of $6,000, more than double what he had been intending to

charge. To his delight, that figure was immediately accepted by

his client.

I continued to work with Mark to refine his fee setting and

client service strategies and watched his new practice take off.

The changes paid off in a big way. Not only did his realized

hourly rate rise 108%, he told me that his stress level had

dropped precipitously, and he did have a more relaxed and

organized appearance. Mark proposed that we start a company

to help other attorneys achieve the same success that he was

enjoying. I accepted, and the adventure began.